Overall stable economic operation, accelerated pace of innovation and development - Overview of the economic operation of the machinery industry in the first half of 2024

On August 7th, the China Machinery Industry Federation held an information conference on the economic operation of the machinery industry in the first half of 2024 in Beijing. The Executive Vice President of China Machinery Industry Federation, Luo Junjie, released the economic operation of the machinery industry in the first half of 2024. The following information release is now published on the Machinery Economy Network for everyone's reference and learning.

Overall stable economic operation, accelerated pace of innovation and development

——Overview of the Economic Operation of the Machinery Industry in the First Half of 2024

(Information Release Draft on August 7, 2024)

China Machinery Industry Federation

Since the beginning of this year, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at the core, the machinery industry has conscientiously implemented the decisions and arrangements of the CPC Central Committee and the State Council, persisted in seeking progress in the midst of stability, promoted stability through progress, faced difficulties and acted actively, effectively responded to risks and challenges, accelerated the cultivation of new kinetic energy and new advantages, and actively promoted the development of high-end, intelligent and green development. Looking forward to the whole year, opportunities and challenges for the development of the machinery industry coexist, confidence and determination are still there, and the economic operation of the whole year is expected to maintain a steady and progressive overall situation.

1、 Basic characteristics of industry operation

According to data from the National Bureau of Statistics, the economic operation of the machinery industry started well in the first quarter of this year, and the stable development trend remained stable in the second quarter. The overall economic operation in the first half of the year was stable and steady with progress.

（1） The industrial scale continues to expand

As of the end of June 2024, there were 130000 enterprises above designated size in the machinery industry, an increase of 11000 from the end of June last year, accounting for 25.8% of the national industry and an increase of 0.8 percentage points compared to the same period last year; The total assets reached 37.6 trillion yuan, a year-on-year increase of 6.8%, accounting for 21.8% of the country's industrial sector and an increase of 0.2 percentage points compared to the same period last year.

（2） Overall stable growth rate of added value

In the first half of the year, the added value of enterprises above designated size in the machinery industry increased by 6.1% year-on-year, slightly higher than the national industrial growth rate by 0.1 percentage points, but lower than the manufacturing industry by 0.4 percentage points. The added value of the five major categories of the national economy mainly involved in the machinery industry has achieved year-on-year growth. Among them, the automotive industry has a significant driving effect, with a year-on-year increase of 9.8% in added value; The growth rate of added value in the general equipment, specialized equipment, electrical machinery, and instrumentation industries has slowed down, at 2.8%, 2.1%, 4.7%, and 5.2%, respectively.

（3） The production and sales of products are stable and improving

In the first half of the year, among the 122 key monitored mechanical products, 75 had a year-on-year increase in production, accounting for 61.5%; 47 types of production decreased year-on-year, accounting for 38.5%. The proportion of products with a year-on-year increase in cumulative production since the beginning of this year has remained above 55%, better than last year's level.

The main characteristics of the production and sales of key products are: firstly, the production and sales of automobiles remain prosperous. In the first half of the year, the production and sales of automobiles reached 13.891 million and 14.047 million respectively, an increase of 4.9% and 6.1% year-on-year; Among them, new energy vehicles continued to make great progress, with production and sales of 4.929 million and 4.944 million respectively, an increase of 30.1% and 32.0% year-on-year. Secondly, driven by the construction of clean energy and smart grids, the production of electrical equipment continues to be at a high level. The output of generator sets in the first half of the year was 111.09 million kilowatts, a year-on-year increase of 14.4%; The output of solar cells was 286.29 million kilowatts, a year-on-year increase of 17.8%. The third is the acceleration of equipment investment, which drives the growth of processing equipment. In the first half of the year, the production of metal cutting machine tools was 333000 units, a year-on-year increase of 5.7%; The production of industrial robots reached 283000 sets, a year-on-year increase of 9.6%. The fourth is the low-level stabilization of construction machinery production. In the first half of the year, the output of excavators was 149000 units, a year-on-year increase of 7.7%. In June, the output increased by 22.2% year-on-year; 5. In June, the production of loaders and concrete machinery turned positive year-on-year. Fifth, benefiting from the market recovery, the production of products serving the consumer sector continues to rise, with the production of service robots and packaging specialized equipment increasing by 22.8% and 7.8% respectively.

（4） Investment growth rate slows down at a high level

After three consecutive years of double-digit rapid growth, fixed assets investment in the machinery industry has continued to grow since 2024, but the growth rate has slowed down. In the first half of the year, fixed assets investment in the machinery industry increased by 9.3% year on year, significantly slower than that of the previous year. Among the five major categories of national economic industries mainly involved in the machinery industry, the investment growth rates of general equipment and special equipment are relatively high, at 14.0% and 12.6% respectively; The investment growth rates in automobiles, electrical machinery, and instrumentation are relatively low, at 6.5%, 3.5%, and 4.5%, respectively. The growth rate of investment in the five major industries except electrical machinery is higher than that of fixed assets investment in the whole society (3.9%).

（5） Steady progress in goods trade

Since the beginning of this year, the foreign trade of the machinery industry has continued the good trend of the previous year. According to customs data, in the first half of the year, the total import and export volume of goods trade in the machinery industry was 557.94 billion US dollars, a year-on-year increase of 4.1%, accounting for 18.7% of the national goods trade; Among them, the import volume was 143.39 billion US dollars, a year-on-year decrease of 0.1%, accounting for 11.2% of the national goods trade; The export value was 414.55 billion US dollars, a year-on-year increase of 5.6%, accounting for 24.3% of the country's total goods trade; We achieved a trade surplus of 271.16 billion US dollars, a year-on-year increase of 8.9%, accounting for 62.3% of the national goods trade surplus.

From the perspective of trade partners, in the first half of the year, the import and export of machinery industry to the countries jointly building the "the Belt and Road" increased by 5.7% and 7.4% respectively year on year, and the import and export to ASEAN countries further improved, with an increase of 6.7% and 11.5% respectively year on year; Imports to EU countries remained unchanged, while exports decreased by 3.5%. The export volume to the top three export trading partners - the United States, Russia, and Germany - all achieved year-on-year growth, with growth rates of 2.0%, 3.8%, and 1.3%, respectively; There has been a significant increase in exports to some Southeast Asian countries such as Vietnam, Laos, Cambodia, and some Latin American countries such as Mexico and Brazil, with growth rates ranging from 20% to 68%. The import volume of the top three import trading partners - Japan, Germany, and South Korea - all decreased year-on-year, with declines of 0.5%, 13.0%, and 0.5%, respectively; There is a significant increase in imports to some European countries such as the Netherlands, Czech Republic, Austria, and some Southeast Asian countries such as Singapore and Vietnam.

From a product perspective, in terms of exports, the export of mainframe and complete machine products continues to maintain a good growth trend, while the export of general machinery and component products stabilizes and rebounds. In the first half of the year, the export of automobiles reached 2.826 million units, a year-on-year increase of 25.8%. Among them, the export of electric vehicles was 1.098 million units, a year-on-year increase of 35.0%, and the export volume of automotive instruments increased by 106.9%; Among electrical products, 507000 industrial boilers were exported, a year-on-year increase of 94.1%; In construction machinery, 109000 excavators were exported, a year-on-year increase of 5.6%, and 1.546 million forklifts were exported, a year-on-year increase of 9.8%. Among them, 354000 electric forklifts were exported, a year-on-year increase of 18.0%; In agricultural machinery, the export of large and medium-sized tractors reached 33000 units, a year-on-year increase of 10.8%. The export volume growth rate of agricultural machinery products such as planting machinery, harvesting machinery, agricultural product processing machinery, and plant protection machinery all exceeded 40%; In heavy machinery, the export of cranes reached 129000 units, a year-on-year increase of 19.8%; In addition, the export of cameras in the service consumption sector was 13.924 million units, a year-on-year increase of 4.2 times, the export of digital printing equipment was 51000 units, a year-on-year increase of 83.8%, and the export volume of food processing machinery and packaging specialized machinery also increased by more than 20%. In general machinery and components, the export volume of pumps and compressors increased by 14.7% and 26.4% respectively, while the export volume of bearings, fasteners, springs, and seals increased by 8.3%, 16.4%, 25.9%, and 14.2% respectively. In terms of imports, there has been a significant increase in the import value of products such as tractors, tractors, excavators, earthmoving machinery, cameras, compressors, generator sets, steam turbines, and specialized vehicles.

（6） The prosperity index has fallen and stabilized

The Machinery Industry Prosperity Index covers multiple dimensions such as production, investment, foreign trade, and economic benefits, comprehensively reflecting the operation of the machinery industry. Affected by factors such as the base of the previous year, the prosperity index of the machinery industry showed a downward trend and stabilized in the first half of this year. In February, the prosperity index was relatively high at 106.6, and then it gradually declined month by month, with the degree of decline gradually decreasing and stabilizing. By June, it was 103.0, and the prosperity index for each month was within the prosperity zone.

2、 Highlights in the development of the industry

In the first half of the year, the machinery industry adhered to innovation led and green development, accelerated the cultivation of new driving forces and advantages, accelerated transformation and upgrading, and a number of major technological equipment and innovative achievements emerged. The resilience and safety level of the industrial and supply chains continued to improve.

（1） New quality productivity leads the industry to improve quality and efficiency

Strategic emerging industries are important carriers of new quality productivity. In recent years, the strategic emerging industry of the machinery industry has developed rapidly and become an important pillar for the high-quality development of the industry. In the first half of the year, the total operating revenue of strategic emerging industries related to the machinery industry accounted for 81.8% of the machinery industry. Among them, the operating income of energy conservation and environmental protection related industries, new energy vehicles and related industries, and high-end equipment manufacturing and related industries increased by 4.9%, 4.3%, and 2.8% respectively year-on-year, and the total profit increased by 10.9%, 20.6%, and 0.2% respectively year-on-year, with growth rates higher than the overall level of the machinery industry.

（2） Green and low-carbon development accelerates industrial technology upgrading

The green development of the mechanical industry continues to be vigorously promoted. The rapid development of clean energy equipment has become an important support for the construction of China's new energy system. In the first half of the year, the output of power generation units increased by 14.4% year-on-year, with wind turbines accounting for over 40% of the total output; The production of photovoltaic cells increased by 17.8% year-on-year. In the first half of the year, new energy accounted for as much as 85% of the newly installed power generation capacity in China; Among them, the newly installed wind power capacity was 25.8 GW, accounting for 16.9%, a year-on-year increase of 12.4%; The newly installed photovoltaic capacity was 102.5 gigawatts, accounting for 67.1%, a year-on-year increase of 30.7%. The large-scale development of clean energy equipment continues to advance, and the supply capacity has significantly improved. The launch of the world's largest 20 MW floating wind turbine "Qihang" by CRRC has become another breakthrough in China's new energy equipment field. The world's first 18 MW offshore wind turbine has achieved grid connected power generation, breaking the world record for the largest single unit capacity of a grid connected wind turbine. The world's first 18-20 megawatt wind storage grid unit developed by Shanghai Electric has been offline, effectively solving the current problems of difficulty in wind power consumption, poor stability, and low level of intelligence. The first and largest scale wind ionization network hydrogen production demonstration project in China has been put into commercial operation, achieving "zero emissions" from wind to hydrogen throughout the entire process. The trend of electrification of construction machinery is accelerating, promoting green and low-carbon development in the field of engineering construction. In the first half of the year, the sales of electric loaders reached 5114 units, exceeding the total of the past two years and accounting for 17.7% of the domestic market's loader sales, with nearly 30% in June.

（3） Innovation driven major equipment achieves new breakthroughs

The machinery industry closely follows the new trend of technological revolution and industrial transformation, actively promotes collaborative innovation, carries out joint research and development, and achieves a number of new breakthroughs in major technological equipment. After years of joint research and development, the first prototype of China's independently developed 300 MW F-class heavy-duty gas turbine has been assembled and produced by Shanghai Electric Group. It has a significant driving effect on the progress of China's gas turbine basic disciplines and industrial technology development, and is of great significance for ensuring China's energy security and green development. XCMG's 4000 ton wheeled crane has been released, breaking the record for the world's largest wheeled crane for the seventh time. The world's first 300 megawatt level compressed air energy storage power station - Hubei Yingcheng 300 megawatt level compressed air energy storage power station demonstration project has achieved grid connected power generation, creating three world records in single unit power, energy storage scale, and conversion efficiency. The world's largest single unit propane dehydrogenation project with an annual output of 1 million tons has been put into operation, creating 10 global and national first sets of equipment, realizing multiple equipment innovations such as reactor special valves, product gas compressors, 50 MW positive pressure explosion-proof motors, 169 MW air heating furnaces, axial flow pumps, etc., and solving some "bottleneck" problems. Shengu Group has successfully developed the largest capacity circulating gas labyrinth compressor in China, filling multiple domestic technological gaps, breaking the monopoly of foreign investment, and solving the problem of long-term dependence on imports for this type of product.

（4） Enhance the resilience and security of the industrial and supply chains

In recent years, facing new changes and challenges, the machinery industry has focused on key links and weaknesses in the industrial chain and supply chain, accelerated the independent research and development of key core technologies and equipment, and focused on improving the resilience and safety level of the industrial chain and supply chain. In the first half of the year, a batch of independently developed achievements emerged in a concentrated manner. The commissioning of Unit 4 of Fangchenggang Nuclear Power Plant marks the comprehensive completion of China General Nuclear Power's "Hualong One" demonstration project, which has driven thousands of nuclear power equipment enterprises upstream and downstream to achieve the localization of more than 400 key equipment. It has the ability to achieve 100% localization of nuclear power equipment, effectively promoting the resilience and strength of China's nuclear power industry chain. The first domestic application - the "Dragon Eye" external nuclear testing system ® Nuclear "has been applied in Unit 3 of Changjiang Nuclear Power Plant in Hainan, with the independently developed Linglong 1 Hengxin ® The acceptance of the system is of great strategic significance for the localization of China's nuclear power instrumentation and control system, core measurement system, and supply chain security. The first domestically developed CAP type nuclear grade pneumatic globe check valve was jointly developed by Shanghai Nuclear Engineering Institute and Dalian Dagao Valve Company, filling the domestic gap, breaking the foreign monopoly, and achieving design independence and equipment localization. China Yituo has presided over the completion of four projects: "Key Technologies and Equipment for Online Detection of Continuously Variable Transmission Systems", "Key Technologies and Applications for High Power Tractor Hydraulic Composite Continuously Variable Transmission Systems", "Heavy duty Automatic Power Shifting Technologies and Industrial Applications", and "Research and Application of Key Technologies for Horticultural Electric Mowers". All of these projects have filled the domestic gap, reached the international advanced level, and achieved independent and controllable technology. The first domestically produced FB2 medium voltage rotor material for a 660 MW ultra supercritical unit jointly developed by Shanghai Electric Equipment Group and Erzhong Equipment Company has been successfully developed, achieving the localization and import substitution of FB2 medium voltage rotors, filling the domestic gap, and marking a new breakthrough in China's high-end material field. The 500 kW multi gear engineering machinery power shift transmission independently developed by Hangzi Group has achieved a breakthrough and is expected to effectively replace imported products. The water electrolysis hydrogen production equipment independently developed by CSSC Perry Hydrogen Energy with a maximum single hydrogen production capacity of 3000 standard cubic meters per hour has been launched, breaking through multiple cutting-edge scientific challenges and core key technologies such as high power, high electrical density, wide load, and low power consumption. The first single stack megawatt level proton exchange membrane electrolysis hydrogen production device in China has been put into commercial operation, solving the bottleneck problem of domestication of key core materials and equipment such as proton exchange membranes and gas diffusion layers.

3、 Difficulties in industry operation

In the first half of the year, the internal and external environment faced by the machinery industry remained complex, and there were still a series of difficulties and problems in the operation of the industry. The foundation for recovery and improvement was still not solid.

（1） Insufficient demand leads to price decline

Market demand remains sluggish and there is a shortage of orders for mechanical products. In the first half of the year, the manufacturing PMI index was below the critical value for four months, and in June, the new orders index, new export orders index, and on hand orders index were all below the critical value at a relatively low level. According to a special investigation of key enterprises in the machinery industry, as of late June, nearly 70% of enterprises have reported problems with insufficient orders, and short orders have become the norm. The order situation of private enterprises and small and medium-sized enterprises is worse than the industry average. Insufficient orders have led to a decrease in capacity utilization. In the first half of the year, the capacity utilization rates of major industries in the machinery industry have all declined, with the capacity utilization rates of the automotive and electrical machinery industries falling to 68.8% and 73.8% respectively, a year-on-year decrease of 3.9 and 2.7 percentage points, respectively.

The sluggish demand and insufficient orders have led to fierce market competition, resulting in a continuous decline in product prices. In the first half of the year, the year-on-year decline in ex factory prices in the machinery industry remained around 2%, with a decrease of 1.9% in June. The five major categories of the national economy mainly involved in the machinery industry saw a year-on-year decrease in ex factory prices in June. In the same month, the ex factory prices of raw materials increased by 1.6% year-on-year, especially for non-ferrous metal products, which saw double-digit price increases. The machinery industry's own prices have declined while raw material prices have risen, squeezing the profit margins of the industry in both directions.

（2） High accounts receivable, difficult to recover

In recent years, the problem of difficult collection of accounts in the machinery industry has persisted, which is a prominent issue affecting the turnover of enterprise funds and production operations. As of the end of June this year, the total accounts receivable of the machinery industry reached 8.5 trillion yuan, a year-on-year increase of 8.3%, with a growth rate 7.3 percentage points higher than the operating income of the same period; The proportion of accounts receivable to current assets was 34.7%, an increase of 0.7 percentage points compared to the same period last year; The average collection period for accounts receivable is 103.2 days, an increase of 7.9 days compared to the same period last year, which is higher than the national industrial average of 37 days during the same period. Among them, the average collection period for accounts receivable in the construction machinery industry and heavy machinery industry exceeds 140 days. According to a special investigation, as of late June, 52% of companies' accounts receivable increased year-on-year, and 35% of companies' overdue amounts in accounts receivable increased year-on-year. As a result, the capital turnover rate of the machinery industry has decreased and the asset liability ratio has increased. In the first half of the year, the turnover rate of current assets in the machinery industry was only 1.2 times, a year-on-year decrease of 0.1 times, which is 0.3 times lower than the national industry; The asset liability ratio is 59.2%, an increase of 0.2 percentage points year-on-year, which is 1.6 percentage points higher than the national industrial ratio.

Negative growth in (III) economic benefits

Affected by multiple factors such as sluggish demand and insufficient orders, fierce competition and price decline, and difficulties in recovering high accounts, the economic benefits of the machinery industry have declined. Since March, the total profit of the machinery industry has declined year-on-year for many consecutive months. In the first half of the year, the operating income of enterprises above designated size in the machinery industry was 14.2 trillion billion yuan, an increase of only 1.0 percent over the same period last year, and the growth rate was 1.9 percentage points lower than that of the national industry; the total profit was 735.18 billion billion yuan, down 6.3 percent from the same period last year, and the growth rate was 9.8 percentage points lower than that of the national industry. Operating income and total profits accounted for 21.9 and 20.9 respectively, down 0.4 and 2.2 percentage points from the same period last year. The operating income profit margin was 5.2, 0.4 percentage points lower than the same period last year and 0.2 percentage points lower than the national industry.

Increased pressure on (IV) foreign trade growth

The foreign trade market of machinery industry is facing many uncertain factors. First, the products with rapid export growth in the early stage have obviously declined. In the first half of the year, the export value of tractors, excavators, lithium-ion batteries and photovoltaic products all decreased year on year. Second, more and more mechanical products have become the target of international trade disputes. Since the beginning of this year, the United States has announced additional tariffs on my country's electric vehicles, electric vehicle lithium-ion batteries, battery parts, solar cells, ship-to-shore cranes and other products; the European Union has announced additional temporary countervailing duties on my country's electric vehicles and additional aerial work platforms. Levy temporary dumping duties and conduct countervailing investigations on wind turbine suppliers; Turkey announced that the tariff policy on some electric vehicles in my country will be extended to all cars; brazil announced a gradual increase in tariffs on our electric vehicles and so on. A variety of factors, machinery industry foreign trade growth pressure increased significantly.

4、 Prediction of the trend of the machinery industry in the second half of the year

Looking forward to the second half of the year, the adverse effects of changes in the external environment will increase. At present, the world is intertwined with turmoil, the evolution of a century of changes is accelerating, international political disputes and military conflicts have erupted at many points, and the growth momentum of the world economy and international trade is insufficient; developed economies have increased their demands for diversified supply chains, trade protectionism is prevalent, and more and more machinery products have become the target of international trade disputes; the game between major powers in key areas has intensified. There are still insufficient effective demand in China, economic operation is divided, there are still many hidden risks in key areas, and there are pains in the conversion of old and new kinetic energy.

However, the basic trend of China's overall long-term economic recovery has not changed, and the favorable factors supporting the stable operation and high-quality development of the machinery industry continue to gather and increase. First, the recent meeting of the political Bureau of the CPC Central Committee studied and deployed economic work in the second half of the year, and once again stressed that we should adhere to the general tone of seeking progress in the midst of stability, strengthen macro-control, deepen innovation-driven development, deeply tap the potential of domestic demand, and constantly enhance new momentum and new advantages. enhance the vitality of business entities, stabilize market expectations, and enhance social confidence. The policy effects will continue to improve the development environment of the machinery industry, release market potential, enhance development confidence, and provide a solid foundation and driving force for the stable development of the industry. Second, the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in" and its supporting measures have been implemented, and four major actions have been deployed: equipment renewal, consumer goods trade-in, recycling and recycling, and standard improvement. Recently, several measures to support large-scale equipment renewal and consumer goods trade-in have been introduced, which will effectively promote investment and consumption and release effective market demand for the machinery industry. Third, the Third Plenary Session of the 20th Central Committee of the Communist Party of China proposed that "we should improve the system and mechanism of developing new quality productivity according to local conditions, improve the system of promoting the deep integration of real economy and digital economy", and stressed the need to "develop new quality productivity according to local conditions, accelerate the cultivation of new momentum of foreign trade, and solidly promote green and low-carbon development", which provides a fundamental follow and development direction for the reform and development of the reform and development of the whole industrial economy, including machinery industry, the machinery industry will generate greater development momentum and stimulate greater development potential. Fourth, relying on the advantages of the ultra-large-scale market, the machinery industry will further promote supply-side structural reform, adhere to innovation-driven and integrated development, accelerate the cultivation of new kinetic energy and new advantages, the industrial foundation will continue to be stable, the resilience of the industrial chain supply chain will continue to improve, and the endogenous driving force for industry development will continue to increase.

In general, the development of machinery industry opportunities and challenges coexist, but the opportunities outweigh the challenges, and the favorable conditions are stronger than the unfavorable factors. Based on comprehensive judgment, it is expected that the economic operation of the machinery industry will continue the overall trend of steady progress in the second half of the year. The growth rate of major economic indicators for the whole year is expected to be more than 5%, and foreign trade will remain basically stable.

This year marks the 75th anniversary of the founding of New China and a key year for the implementation of the 14th Five-Year Plan. In the second half of the year, the machinery industry will continue to adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 20th Central Committee, earnestly implement the general tone of the work of seeking progress while maintaining stability, implement the new development concept completely, accurately and comprehensively, accelerate the construction of a new development pattern, deepen innovation-driven development, develop new quality productivity in accordance with local conditions, and continuously enhance new advantages, accelerate the transformation and upgrading of traditional industries, solidly promote the development of high-end, intelligent, green, and integrated development, continuously enhance the continuous recovery of the machinery industry, and present the 75th birthday of the motherland with better results.

Information source: Jijingwang